Havilah Quarterly Activities Report - Period Ending October 2016
Adelaide, Dec 1, 2016 AEST (ABN Newswire) - Havilah Resources Limited (
ASX:HAV) (Havilah) plans to sequentially develop its portfolio of gold, copper, iron, cobalt, tin and other mineral resources in South Australia. Our vision is to become a new mining force, delivering value to our shareholders, partners and the community.
HIGHLIGHTS FOR QUARTER
- First 10,000 ounces of gold produced from Portia Gold Mine
- New daily production record of approximately 34 kg gold concentrate
- Record single day gold pour of 49 kg of unrefined gold
- Drilling indicates southern extensions of the Portia gold mineralisation
- Drilling confirms economic grades of gold extend at least 23 metres beneath the current pit floor
- Decision to cutback south wall of open pit by 120 metres and extend operations by 12 months
- New website and social media platforms launched
PORTIA GOLD MINE
The Portia Gold Mine and processing plant operated almost continuously during the quarter, notwithstanding an extended abnormally wet period. Sufficient ore was delivered to the ROM pad to allow continuous processing, excepting for periods of scheduled maintenance. As a result, several milestones were achieved including production of the first 10,000 ounces of gold, record daily production of 34 kg and a record single gold pour of 49 kg of unrefined gold.
The first table below summarises total production for the three months ending October 2016 (The previous quarter represented only two months with commercial production being reached at the end of May 2016). The operations at Portia are being accounted for as a Joint Operation under the applicable financial reporting standards due to the specific agreement in place related to the development of Portia. Under this agreement the revenue is shared 50/50 with Consolidated Mining and Civil Pty Ltd (CMC). The second table below therefore reflects only 50% of the ounces produced and sold from Portia, which is attributable to Havilah.
Mining progressed according to plan with 1,392,000 BCM (Bulk Cubic Metres) and 127,000 tonnes of ore mined during the quarter. In this quarter the grade of ore processed increased by 41% and the All-In Sustaining Cost decreased by 11% as operations moved towards a steady state during the quarter.
A modified mining plan based on new geotechnical advice was adopted and no pitwall slips occurred during the period. Short term higher than normal water flows from the pit floor, exacerbated by frequent rain, were managed by a drainage system and high capacity pumps.
As operators of the processing plant CMC have undertaken a program of scheduled maintenance and upgrading to improve the reliability and efficiency of the processing plant, and as a consequence, down time has been minimised.
Havilah has continued to upgrade gold room procedures and worked on improving the purity of concentrates and quality of gold bars that are poured.
During the quarter CMC largely completed mining of all overburden and ore substantially in accordance with the original mine design. This means that most of the target in pit resource of 355,000 tonnes of ore material has now been delivered to the surface. This is within the original 18 month time frame estimated by CMC, taking into account rain delays and pitwall re-profiling from geotechnical studies. Processing of the stockpiled ore will continue for several months.
A significant extension to the Portia gold mineralisation was discovered by earlier Havilah drilling in the south wall of the open pit (see previous Quarterly report). Based on internal non-JORC gold resources estimated for this mineralisation, Havilah and CMC agreed to proceed with a 120 metre cutback of the south wall under the present 50:50 revenue sharing arrangement. This agreement has subsequently been formalised in a Memorandum of Understanding between the parties. Havilah has been working closely with the Department for State Development of South Australia (DSD) to secure approvals for this expanded operation, which will entail expansion of the overburden waste dump and tailings storage facility. The full 120 metre cutback will effectively extend the Portia mine life by a further 12 months.
Significant gold mineralisation has also been reported in pit floor drilling, including 23 metres of 6.8 g/t Au from the pit floor to 24 metres below. Subject to further confirmatory drilling it appears there is potential for at least a futher 20 metres of economic gold mineralisation below the current pit floor.
Havilah is maintaining an active drilling program with two drilling rigs currently operating at the southern end of the open pit with the aim of further extending the Portia gold resource.
About the Portia gold deposit:
Portia has a JORC Inferred Resource of 635,000 tonnes @ 2.9 g/t for 54,000 ounces of contained gravity recoverable gold (refer to ASX announcement dated 26 June 2009 - note that all the assumptions underpinning the information continue to apply and have not materially changed). The gold occurs as free grains, mostly within a 2-3 metre thick distinctive light grey silty horizon that lies beneath approximately 75 metres of free-digging Tertiary clay and sand overburden. The current mining plan is based on an optimised open pit design that aims to recover at least 80% of this resource. Considerable upside potential exists in the immediately underlying ancient Broken Hill age bedrock that is known to host a major gold mineralised replacement/vein system, and which is considered to be the source of the gold resource currently being mined. Recovery of the gold is by low cost gravity methods that does not require the use of chemicals.
KALKAROO COPPER-GOLD PROJECT
Havilah has put a revised proposal to the Adnyamathanha people with regard to its compensation offer negotiations for a native title agreement for the Kalkaroo project. The compensation offer is framed in a way that that will minimise the effect on Havilah's ability to raise development finance for the project in the future.
Havilah also continues to work on an updated resource model and Probable Ore Reserve for Kalkaroo which incorporates additional drilling data.
EXPLORATION
The Company has maintained drilling in and around the Portia open pit in the quest to expand the gold resource base as summarised above.
Preparations for the planned PACE (Program for Accelerated Exploration) drilling programs were undertaken, with planning of drillhole locations, submission of required PEPR (Program for Environmental Protection and Rehabilitation) documentation to DSD and submission of requests for aboriginal heritage surveys over the areas concerned. A number of promising drilling targets in the Benagerie Dome near Portia will be tested, including drilling of a large IOCG (iron oxide copper gold) target in the centre of the Benagerie dome only several hundred metres from the Portia gold deposit. Several look-alike Portia high grade gold intersections will also be followed up in the Lorenzo and Shylock prospect areas. It is planned that drilling of these prospects plus high grade tin occurrences at Prospect Hill will commence during the first quarter of 2017.
PROMOTION
Havilah's Managing Director and Chief Financial Officer attended the RIU Resources Investor Roadshow in Sydney and Melbourne in September and a copy of the presentation is available on the following link:
http://www.abnnewswire.net/lnk/ANUC1MG4
A complete transcript of the presentation given to the Sydney Mining Club in June 2016 appeared recently in the high quality Australian Resources and Investment Magazine.
http://www.abnnewswire.net/lnk/LA4011KZ
As at 31 October cash at bank was $2.3 million.
During the quarter Havilah made further debt repayments of $1.5 million, which reduced the Company's outstanding debt to $2.0 million. Since the end of the quarter Havilah made further debt repayments of $2.0 million to fully repay the outstanding debt. The debt has been repaid earlier than expected and well before the final payment was due in 2017.
By 31 October the Company had delivered 6,510 ozs against the 10,000 ozs hedged at a gold price of A$1,618 as part of the Investec Loan and Risk Management Facility. That leaves a balance of 3,490 ozs hedged at an average gold price of A$1,618.
During the quarter approximately 2.5 million listed options were exercised resulting in just over $0.7 million in additional funds to the Company.
To view the full report, please visit:
http://abnnewswire.net/lnk/347KTP25
About Havilah Resources Ltd
Havilah Resources Ltd (ASX:HAV) is a debt free South Australian gold producer having recently financed and developed its first gold mine at Portia in north-eastern South Australia. It plans to follow on with three copper-gold-cobalt mining developments at North Portia, Kalkaroo and Mutooroo, which are underpinned by a JORC resources mineral inventory of over 1.4 million tonnes of copper, 3.6 million ounces of gold, and 18,000 tonnes of cobalt.
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